BENGALURU (Reuters) – Shares of India’s Jio Financial Services (JIOF.NS), which is snapped up by billionaire Mukesh Ambani Reliance Industries (RELI.NS), fell to a minimum on Monday in its first trade as investors waited. For more clarity on the scope of work being drained from the inventory.
Ambani’s Reliance was last month spun off from JFS, with the share price set at Rs 261.85 during a private discovery session, valuing JFS at around INR 1.7 trillion ($20.5 billion).
However, that price was higher than an estimate of 160-190 rupees per share by five analysts who spoke to Reuters before Reliance set the price. On Monday, JFS shares plunged 5% – the most they can drop in a single session – shortly after trading began, with more than 73 million shares changing hands, lowering its valuation to 1.58 trillion rupees ($19 billion).
Shares of Reliance Industries fell 1.2%, while the broader Nifty 50 Index (.NSEI) rose 0.5%, up 2.5% in rival Bajaj Finance (BJFN.NS).
“What is the fair value of this company will not become clear until some time after the earnings are announced and the companies are incorporated,” said Arun Kejriwal, founder of Kejriwal Research & Investment Services.
Investors expect Ambani to provide more details about JFS during Reliance’s annual general meeting on August 28.
Reliance Industries has agreed to list 6.35 billion shares of JFS, but it wasn’t immediately clear how much stake this represented in the company.
As part of the demerger process, Reliance Industries shareholders received one JFS share for every Reliance share of stock.
Even with the low valuation, JFS is the third largest non-bank financial company (NBFC) in India, after Bajaj Finance (BJFN.NS) and Bajaj Finserv (BJFS.NS), which are valued at ₹4.15 trillion and ₹2.32 trillion. Rs respectively.
Non-executive Chairman KV Kamath, a veteran banker and former chairman of ICICI Bank (ICBK.NS), said JFS intends to be a “full-service financial services player”.
He declined to elaborate on the company’s business plans or outlook, but JFS has already announced a joint venture with BlackRock Inc (BLK.N) to launch asset management services in India, with an initial investment of $150 million each.
“JFS will differ from most other fintech companies in accessing massive amounts of data collected from a non-financial relationship,” analysts at Macquarie Research said in a note earlier this year, referring to Reliance’s retail and communications units.
“It can process and analyze these matters in real time to provide financial services such as Alibaba, Amazon, Apple, Facebook, Google and others,” the research note added.
As part of the spin-off, Reliance Industries has merged the following units into JFS: Reliance Retail Finance, Reliance Payment Solutions Ltd, Jio Information Aggregator Services and Reliance Retail Insurance Broking. The company said Jio Payments Bank would follow through on the merger if the central bank approved the merger.
Reliance has appointed Hitesh Sethia as CEO of JFS and Ambani’s daughter Esha Ambani as a non-executive director to the company’s board.
Narendra Solanki, head of fundamental research at Anand Rathi Shares and Stock Brokers, attributed JFS’ weak debut to the exit of index funds that track Indian benchmarks, which must sell their JFS shares after listing.
JFS is included in major global indices such as the FTSE as well as India’s Nifty 50 (.NSEI) blue-chip index after its spin-off because Reliance Industries is also a part of these indices.
It is due to be removed from some of India’s indices at the end of the third day of listing, as per the exchange rules.
($1 = 83.1020 Indian rupees)
Additional reporting by Rama Venkat and N R Sethuraman in Bengaluru; Additional reporting by Ira Dougal in Mumbai; Editing by Savio de Souza and Miral Fahmy
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